The descending triangle is a continuation bearish chart pattern. The figure is formed by two converging lines.
The first line is a bearish slant forming resistance, also called the “descending triangle resistance line”.
The second line is a horizontal support, also called a “descending triangle support line”.
The descending triangle is confirmed / valid if it has oscillation between the two lines.
The descending triangle is considered valid if the price touches at least 3 times the support line and 2 times the resistance line (or at least 2 times the support line and 3 times the resistance line).
The price objective of a descending triangle is determined by the height of the base of the triangle which is carried over to the breakout point. Another technique is to draw a parallel to the line of resistance of the descending triangle from the first contact with the support.
Notes and Statistics: #
- The exit is most often done at 2/3 of the triangle. This is the output level that offers the best performance.
- The target price of the ascending triangle is generally reached before the point of the triangle.
- Avoid taking a position if the break / exit occurs before 2/3 of the triangle.
- In 54% of cases, the exit is bearish.
- In 61% of cases, the descending triangle is a continuation figure.
- In 54% of cases, the price target of the triangle is reached when the support is broken down.
- In 64% of cases, after exiting, the price carries out a pullback in resistance on the support line of the triangle.
- More than half the time, when a false breakout occurs from the bottom, the exit is finally made from the top. On the other hand, false breakouts from above are rare with only 6%.
